Overshooting of (Useful) Cultural Practices

Abstract

Prior research has traditionally examined how useful practices spread in organizations and how they develop over time. However, it has been observed that practices can "overshoot," either because there is over-diffusion---some agents adopt to the detriment of organizational performance---or because there is over-sophistication---the practice is overly developed, becoming too elaborate and reducing organizational performance. Independent models of over-diffusion and over-sophistication have been proposed; this paper integrates both aspects in a simple and unified model of overshooting. We offer a cultural evolution model that studies how interaction dynamics among employees are able to diffuse and stabilize an equilibrium of under-performing cultural practices, and at the same time, over-develop the practice so its sophistication goes beyond productive levels. People adopt practices from others based on information about the practice’s true productive value (including its decreasing marginal return as it diffuses), but also influenced by social dynamics with other employees, such as social pressure and status. Our model clarifies under which circumstances over-diffusion and over-sophistication can happen, and how these two elements of overshooting relate to one another. We map our model in detail to two cases: process management practices (e.g., six sigma) and Uber's aggressive culture.